President Donald Trump is used to bending financial markets to his will.

But with the war in Iran, he may have reached the limit of his ability to do so.

On Friday, the S&P 500 closed down 1.7% and notched its fifth-straight weekly decline, its worst stretch since 2022 and a sign of rapidly faltering confidence in a swift resolution to the Iran war.

Since the U.S. attacked Iran on Feb. 28, the S&P 500 has declined about 7%.

The Dow Jones Industrial Average fell 1.7% Friday and has lost nearly 4,000 points since the start of the war. It is now down more than 10% from its most recent high, a correction in technical terms.

The tech-heavy Nasdaq fell further into correction territory Friday, closing down 2% and off 13% since its record close in October.

Oil prices also rose sharply, with U.S. crude topping $100 a barrel and global Brent crude at approximately $114 at around 4 p.m. ET. The yield on the 10-year Treasury note surged to 4.4%, the highest since last summer. Some energy stocks, like Exxon, traded near all-time highs.

Shortly after stock markets had closed Thursday, Trump announced he was pausing attacks on Iranian energy sites for 10 days. But stocks barely budged.

Just days earlier, they had rocketed higher Monday when the president announced there had been “productive” talks with Iranian representatives, so he would pause strikes on Iranian power facilities for five days.

“The market is looking beyond commentary from the administration,” said Adam Turnquist, chief strategist at LPL Financial investment group, which manages nearly $2 trillion in assets. “They actually want concrete details and a resolution. And actions speak louder than words, that’s really present in [current] price action.”

This new reality stands in contrast to Trump’s ability to move markets throughout his first term and into the outset of his second.

Trump spent the better part of 2025 whipsawing traders via frequent changes regarding tariff levels. Eventually, a pattern emerged: The president would announce a new import duty, markets would fall, and Trump would usually end up reversing himself in some way.

The trend even got a nickname, coined by a columnist for the Financial Times: “TACO” — for “Trump Always Chickens Out.” (Last month, the Supreme Court struck down many of the tariffs.)

This time, the chain of events unleashed by Trump’s decision to attack Iran are such that a return to prewar conditions — and market levels — is virtually impossible in the short or even medium term, experts say.

The disruption to flows of oil and gas has been so substantial that transport costs, and ultimately the price paid per barrel, are likely to stay elevated indefinitely. Even when the Strait of Hormuz, which Iran has used as a chokepoint to drive concessions from the West, eventually reopens, the cost of transiting through it has likely gone up for the foreseeable future.

And the broader fallout on the economy and consumer purchases is already being felt.

That, in turn, has made interest rate cuts by the Federal Reserve less likely, because the higher oil costs are set to contribute to already sticky inflation. The odds of a rate hike before the end of the year have now outpaced the odds of a cut.

“Let’s say hostilities end tomorrow — the market will rally, but it’s not necessarily ripping back to where it was before because of the disruptions that have occurred,” said Steve Sosnick, chief strategist at Interactive Brokers financial group. “You’re not going to see oil go back to where it was immediately. You’re not going to see markets price in rate cuts the way they were before.”

White House spokesman Kush Desai said Friday that Trump “continues to be a powerful force driving the market’s confidence in the United States as the most dynamic, pro-business economy in the world.”

“Once the military objectives of Operation Epic Fury have been achieved and the market’s short-term disruptions are behind us, everyday investors are set to reap a windfall in a booming American economy,” Desai said.

A day earlier, the president said he was not concerned about the market’s recent performance.

Oil prices “have not gone up as much as I thought, Scott, to be honest with you,” he said during a Cabinet meeting, addressing Treasury Secretary Scott Bessent. “It’s all going to come back down to where it was and probably lower.”

Markets have not fallen further because the outlook for earnings growth remains bullish, Turnquist said — though that could change the longer the conflict drags on and further impinges on consumer spending and business investment.

And compared to prior oil shocks, the U.S. economy is less oil-intensive, as it has transitioned to one that is largely service-oriented. Global oil markets have also been supported by America’s oil production boom over the past decade — with more supplies online, overall prices are less likely to rise as much.

Yet by some metrics, stocks were already considered expensive prior to the hostilities. Having already contended with stretched valuations, traders may find it much harder to power stock prices back to the record levels seen just prior to the start of the latest conflict.

“The risk-reward is still very heavily weighted toward [the] risk” of further stock-price declines,” said Matt Maley, chief market strategist at Miller Tabak financial group.

Should hostilities persist, Trump’s ability to influence markets will only further erode, Sosnick predicted.

“He now realizes he’d like to jawbone his way out of it, but it’s not that easy at this point because the situation encompasses so many moving parts and difficult variables,” Sosnick said. “It doesn’t lend itself to a quick set of comments mollifying investors.”

A flurry of bets made prior to major announcements about the Iran war has ramped up speculation that individuals or groups with advance knowledge of U.S. military plans are cashing in on insider information.

And while prediction market platforms Polymarket and Kalshi now say they are taking more proactive measures designed to prevent such illicit activity, experts say there have been few signs so far that Trump administration regulators are cracking down.

“You need the deterrent factor that exists on the government side,” said Chris Ehrman, an attorney who previously served as head of the Commodity Futures Trading Commission’s whistleblower office. Without it, he said, simply allowing the platforms to self-regulate often amounts to “whipping them with a wet noddle.”

So far, the suspect bets have been largely concentrated on Polymarket, a platform that allows users to wager on the likelihood of certain events taking place. But in at least one case, speculation about a possible insider trade has migrated to a more traditional market.

The CFTC did not respond to a request for comment. In an interview this week with the Washington Reporter, an online conservative publication, CFTC Chairman Michael Selig pushed back on the idea that his office was not taking on the issue.

“There’s this false media narrative that CFTC-regulated markets are the Wild West and have no regulation and that’s blatantly false,” he said. “The CFTC uses complex surveillance tools and has seasoned career staff that pro-actively monitor these markets for insider trading and fraud.”

The CFTC recently issued guidance that reminded prediction market platforms of their responsibilities to limit insider trading.

Noah Solowiejczyk, a partner at law firm Fenwick & West and a former federal prosecutor, said the agency has recently shown signs it wants to take insider trading cases more seriously.

“I think you’ll see an enforcement action or prosecution happen” in an events-driven insider trading case, Solowiejczyk predicted.

Once relegated to the world of finance, insider has become a major topic in recent years as concerns about everything from politicians’ stock trades to professional athletes’ performances are now widely scrutinized for evidence of manipulation — fueled in part by the ongoing creep of investing and gambling onto smartphones and into everyday life.

Data suggests traders with advanced knowledge of geopolitical events may have collectively pocketed millions from recent bets on Polymarket. Last month, in the run-up to the latest round of American and Israeli attacks on Iran, some $529 million was traded on the platform tied to the timing of the strikes, Bloomberg News reported.

Earlier this week, analytics firm Bubblemaps said a series of connected Polymarket accounts had earned $1 million over the past two years predicting U.S. and Israeli strikes in the Middle East.

On Monday, approximately 15 minutes before President Donald Trump posted that there had been “productive” talks with Iran, stocks and oil futures trades on the main exchange run by longtime markets firm CME Group saw an unusual burst of volume compared to the relatively subdued backdrop seen the rest of that morning.

The bets predicted stocks would rise and oil prices would fall that day — precisely what happened once Trump made his announcement.

Depending on when they closed, the trades could have yielded millions — though shortly after Trump’s post, Iran denied there had been direct talks, and the market moves reversed somewhat.

Polymarket did not respond to a request for comment. A CME spokespersn declined to comment.

Solowiejczyk said the CFTC has likely been hampered by staffing shortages, which may be impacting its ability to take on new cases. Barron’s magazine recently reported that the CFTC has made significant cuts in its enforcement division, including the loss of all enforcement attorneys in its Chicago office.

It is not clear to what extent the anonymity that’s available to traders on Polymarket and Kalshi would hinder a federal investigation into illicit trading.

While part of Polymarket is registered in the U.S., making it subject to federal know-your-customer requirements, another part is registered in Panama — something that could make it harder to trace individuals making insider bets. Experts also say traders can circumvent geographic restrictions by using virtual private networks, or VPNs, that mask which country they are operating in.

So far, no American has faced federal charges in connection with insider trading on event-driven news. In February, Israel charged two of its military service members with using classified information to place bets on Polymarket related to unspecified combat operations.

Polymarket only recently began accepting trades from U.S.-based users, following an effort by the Trump administration to end a Biden-era push to restrict its use here.

Kalshi is fully registered in the U.S., and recently suspended an editor for influencer MrBeast in connection with alleged insider trading.

Many of the suspect bets on Polymarket are placed by accounts that are either new or solely focused on one specific outcome, further suggesting insiders could be behind them.

Even prior to the recent military operations and the accompanying suspicious bets, accusations of insider trading on Polymarket had begun to surface.

In January, a Polymarket user earned some $400,000 betting that then-Venezuelan President Nicolás Maduro would soon be out of office. One trader appeared to make approximately $1.2 million forecasting whom Google would announce as the most-searched people of 2025.

In response to a question about insider trading in November, Polymarket CEO Shayne Coplan told “60 Minutes” that “having an edge” is “a good thing.”

Coplan said that while he was focused on the ethics of insider transactions, it was “sort of an inevitability that this will happen, and there’s a lot of benefits from it.”

This week, Polymarket and Kalshi both unveiled measures designed to further crack down on insider trading.

Polymarket announced new rules explicitly stating users cannot act on insider information or trade on events whose outcome they could influence.

Kalshi said it was deploying technology that would “preemptively block politicians, athletes, and other relevant people” from trading in politics and sports markets. It also said it was adding a whistleblower function to its markets homepage that would allow users to flag potential violations.

A representative for Kalshi said the company has not been involved in the recent suspect trades. “We ban insider trading and enforce it,” a spokeswoman said in an email.

Polymarket, recently valued at $9 billion, counts Donald Trump Jr. as an investor. The president’s eldest son is also a strategic adviser to Kalshi, its top competitor.

White House representatives denied any wrongdoing originated from the administration and blasted insinuations that they were.

“All federal employees are subject to government ethics guidelines that prohibit the use of nonpublic information for financial benefit,” White House spokesman Kush Desai said in a statement.

“However, any implication that Administration officials are engaged in such activity without evidence is baseless and irresponsible reporting.”

“The President has no involvement in business deals that would implicate his constitutional responsibilities,” David Warrington, White House counsel, said in a statement. “President Trump performs his constitutional duties in an ethically sound manner and to suggest otherwise is either ill-informed or malicious.”

“Don does not interface with the federal government as part of his role with any company that he invests in or advises and has no influence or involvement with administration policies relating to prediction markets,” a representative for Donald Trump Jr. said in a statement.

Members of Congress have taken a more circumspect view of event-market platforms, putting forward legislation that would ban elected officials and government employees from using them and restricting the types of events, such as war or deaths, users can wager on.

The most recent bill, introduced by Sen. Chris Murphy, D-Conn., and Rep. Greg Casar, D-Texas, would ban trades on government actions, terrorism, war, assassination and events “where an individual knows or controls the outcome.”

“There’s no getting around the fact that any prediction market where somebody knows or controls the outcome of a bet is ripe for corruption,” Murphy said in a statement.

“Even worse, prediction markets are also an avenue by which government decisions get influenced by who’s making money off them, and that should be unforgivable to the American public,” he said.

WASHINGTON — The Senate agreed unanimously early Friday to fund the Department of Homeland Security, but without funding for immigration enforcement and deportation operations.

Senators approved the package at 2:20 a.m. by voice vote following a marathon session.

The 42-day funding lapse has seen them go without pay, leading many to call out of work and causing long lines at airports. While the measure still needs to pass the House, the Senate vote paves the way to allow airports to fully function again.

The legislation would fund all of DHS except Immigration and Customs Enforcement and Customs and Border Protection, which Democrats have refused to vote for without significant reforms to immigration raids and deportation practices.

The deal followed arduous bipartisan negotiations that occurred in fits and starts over the last six weeks, succumbing to the impasse around policy changes to immigration enforcement. Under the new plan, Democrats get their weeks-long demand to fund the department with the exceptions of ICE or CBP, but also without the restrictions they sought on how immigration officers may conduct operations.

“This could have been done three weeks ago,” Senate Minority Leader Chuck Schumer, D-N.Y., said. “This is exactly what we wanted.”

The bill faces an uncertain future in the Republican-controlled House. It is expected to have President Donald Trump’s support, which could help corral conservatives who have been skeptical about splitting off ICE funding from the underlying bill.

“Hopefully they’ll be around, and we can get at least a lot of the government opened up again, and then we’ll go from there,” Senate Majority Leader John Thune, R-S.D., said of the House and a potential vote on Friday. He said he texted with Speaker Mike Johnson, R-La., on Thursday night.

The Senate adjourned for a two-week recess, leaving the House with few options other than to accept their bill as written.

Thune separately blamed Democrats. “President Trump should never have had to step in to rescue TSA workers and U.S. air travel. We are here because, thanks to Democrats’ determined refusal to reach an agreement, there will be no Homeland Security funding bill this year.”

Speaking after the vote, Schumer said: “In the wake of the murders of Renee Good and Alex Pretti, Senate Democrats were clear. No blank check for a lawless ICE and Border Patrol.”

He added that the “long overdue agreement” funds TSA, the Coast Guard, the Federal Emergency Management Agency and the Cybersecurity and Infrastructure Security Agency, and “strengthens security at the border and the ports of entry, and keeps Americans safe.”

He added that the deal “could have been accomplished weeks ago if Republicans hadn’t stood in the way.”

The White House and Republicans declined to grant Democrats’ demands to restrict Trump’s immigration practices. They now plan to pursue the remainder for funding for ICE and CBP in a separate party-line bill, which they could also use to pass Iran war funding and elements of the Trump-backed SAVE America Act.

Senate Republicans held a vote open for hours Thursday as the two sides continued to negotiate, having traded offers for days.

Trump, meanwhile, announced earlier Thursday that he would instruct newly sworn-in Homeland Security Secretary Markwayne Mullin to “immediately pay our TSA Agents in order to address this Emergency Situation.”

That move may not be needed if the House passes the Senate legislation, according to a senior administration official, who said the White House is waiting to see what will happen.

This official also said the funds to pay TSA agents would come from the so-called One Big Beautiful Bill, the tax-cut and spending legislation Trump signed into law in July. It’s not clear exactly how that would work, but the administration has dipped into those unspent funds before to cover pay gaps during funding lapses.

The House can either debate and vote out the Senate-passed measures in the Rules Committee before bringing them to the floor under a simple majority vote, or Johnson can seek to fast-track it to the floor.

The House was set to hold an unrelated vote at 10 a.m. before leaving for recess.

We’d like to hear from you about how you’re experiencing the partial government shutdown, whether you’re a TSA agent who can’t work right now or a federal employee who is feeling the effects at your agency. Please contact us at tips@nbcuni.com or reach out to us here.

TSA officers missed their first full paychecks in mid-March, leading many to call out of work. Call-out rates for TSA officers have exceeded 11% nationally, with rates at some airports passing 40%.

Trump sent ICE agents to airports to help TSA earlier this week. Unlike TSA officers, ICE agents continue to receive paychecks during the partial shutdown as a result of funding from the so-called One Big Beautiful Bill, a sweeping GOP domestic policy package, that Trump signed into law last year.

A federal judge in California has blocked the Trump administration from designating Anthropic as a supply chain risk to national security and cutting off the AI company’s work with federal agencies.

Anthropic sued the Defense Department and other federal agencies this month after the Pentagon labeled it a “supply-chain risk to national security.” President Donald Trump said he would also ban the use of Anthropic’s products across other federal agencies.

“Defendants’ designation of Anthropic as a ‘supply chain risk’ is likely both contrary to law and arbitrary and capricious,” U.S. District Judge Rita Lin of Northern California wrote in her order Thursday night. “The Department of War provides no legitimate basis to infer from Anthropic’s forthright insistence on usage restrictions that it might become a saboteur.”

Lin paused her order for a week to allow the administration time to appeal.

The Defense Department and the White House did not immediately respond to a request for comment Thursday evening.

“We’re grateful to the court for moving swiftly, and pleased they agree Anthropic is likely to succeed on the merits,” an Anthropic spokesperson said in a statement Thursday. “While this case was necessary to protect Anthropic, our customers, and our partners, our focus remains on working productively with the government to ensure all Americans benefit from safe, reliable AI.”

The supply chain risk designation requires the Pentagon and its contractors to stop using Anthropic’s commercial AI services for all defense business.

Defense Secretary Pete Hegseth said on X in late February that he was issuing a directive to give the company the “supply chain risk” label. Trump also said he was ordering all federal agencies, including the Treasury and State departments, to cease using Anthropic’s AI technology.

“The record reflects that the Challenged Actions were taken without any meaningful notice or pre-deprivation process (and, in the case of the Presidential Directive and the Hegseth Directive, without any post-deprivation process either),” Lin wrote in her order.

The order Thursday also bars other agencies from cutting off their work with Anthropic. Lin wrote that the order restores the status quo.

“This Order does not require the Department of War to use Anthropic’s products or services and does not prevent the Department of War from transitioning to other artificial intelligence providers, so long as those actions are consistent with applicable regulations, statutes, and constitutional provisions,” the order said.

Anthropic filed two lawsuits against the Defense Department — one in U.S. District Court for Northern California and the other in U.S. Circuit Court of Appeals for Washington, D.C. — alleging that the federal government’s moves go beyond a normal contract dispute and instead are an “unlawful campaign of retaliation” that followed months of heated negotiations about how the military should be able to use Anthropic’s AI systems.

Anthropic had sought stronger guarantees that the Pentagon would not use its AI systems for autonomous weapons or mass domestic surveillance.

Anthropic is the creator of the Claude chatbot system and the only AI company whose services were cleared for use on the Defense Department’s classified networks.

Hours after Hegseth’s announcement last month, OpenAI CEO Sam Altman said his company had reached an agreement with the Pentagon to use its services in classified settings.

Lin wrote: “Although Anthropic was on notice that the government objected to its contracting terms, it had no notice or opportunity to object before Defendants publicly barred it from all federal government work and blacklisted it with private companies working with the U.S. military. It also had no notice or opportunity to object to the factual basis for its designation as a supply chain risk, which it learned of in this litigation.”